China’s Attractiveness to Foreign Companies and Potential PR Risks
There is no doubt that China’s booming economy takes slower speed amid the global financial crisis. However, foreign companies are still flocking to China for business opportunities.
InvestHK, the Hong Kong department that promotes the city as a place to do business reported Wednesday that it had advised 257 companies setting up business in Hong Kong this year, more than in any other year, according to the International Herald Tribune’s story. But going to China to deal with business is not an easy decision, not only because China is as big as the U.S. and its market is very much segmented, but also because of the under-the-table skills and potential risks doing business in China.
I remember On Sept. 14, 2006, SK-II, the high-end cosmetics product of Procter & Gamble (my previous employer), was found by China’s quality supervision authority traces of two elements that could cause potential side effects such as rashes and liver problems. The alleged quality defect, together with P&G’s stubborn reaction in the first few weeks, triggered a nation-wide negative media coverage. Angry online comments and sporadic outbursts of violence in SK II stores escalated the crisis and forced P&G to suspend sales of SK-II products in China for a few months.
P & G mismanaged the crisis on three key elements: failure to correctly evaluate the influence of the burgeoning Internet; failure to execute local strategy to manage the crisis according to consumer habits; failure to avoid potential political risks in a country with difference political systems.
In the digital times, the crisis spread path both on traditional media and on the Internet, which spreads news and people’s dissatisfaction much faster. This fast track also made SK-II, a brand P&G spent huge amount of money and time to promote, sink in a few weeks. From a PR perspective, I’d like to advise people on managing public relations in China: keeping low-profile; paying more attention to the Internet; quick and accurate response; avoiding political risks. If you can do all these, you can at least avoid the potential PR risks in China.
